At
491-acres, Water Island is the fourth largest of
the U.S. Virgin Islands. It can be reached from the Crown Bay Dock
on the west side of the city. In its earliest incarnation as Fort
Segarra in World War II, it underwent an amazing
metamorphosis to become a one-time exclusive resort.

It
is such a unique tale that it helped inspire Herman Wouk's Don't Stop
the Carnival, a classic novel describing the pitfalls and
heartaches of Caribbean hotel ownership. Once you
read this book, you'll better understand why things so often go wrong
at tropical resorts.

After
WWII Army troops pulled out of Water Island , the Chemical Warfare
Division laid claim to it for experiments with poison gas.
The program was discontinued in 1950, and the Army did nothing
more with the island.

In
1951, retired New York stockbroker Walter H. Phillips and
his wife visited Water Island in search of a likely homesite.

Although
the land was deserted and desolate without a single resident,
Phillips decided the island had resort potential. He enlisted
the help of local officials who wanted to see the island
developed, and a bill was passed through Congress that transferred
ownership of Water Island from the Army to the Interior Department.

Phillips
then leased the entire island--without charge--from the government
for a period of 40 years in return for developing it. In
essence, Water Island became a separate principality: exempt
from all taxes, it was up to Phillips to supply all roads,
garbage collection and other services.

In
addition to constructing the hotel (now closed), Phillips
was also leasing individual land plots for $2,500, and many of his leaseholders
were converting old gun turrets, concrete latrines and soldiers'
barracks into small homes and apartments.

The
island's rugged terrain has several roads crisscrossing
it. There are still a few remains of old Fort Segarra to see. Iguanas
and hummingbirds are also commonly spotted on Water
Island treks.